Privatization of Public Water: The “Monterey Amendments” to State Water Project Contracts

How a Secret Meeting in 1994 Continues to Threaten California’s Water Reliability

A Water Heist in Plain Sight

The State of California is in the midst of a prolonged drought but there’s water being stored right now that would meet the needs of over 10 million people – 25% of California’s ratepayers – yet they can’t access it. Why is this legal? And how can we change it?

Your Right to Access California water

Access to water is not only a basic human right that’s recognized globally, in California it’s actually written into the State Constitution, which means it’s your legal right to access it. The concept of access to water as citizens’ rights is explained in a concept called the public trust doctrine.

This concept goes all the way back to sixth-century Roman law that asserted water should be held in trust by the state for current and future citizens.

The public trust doctrine is written into the State of California Constitution and its Water Code, which means it’s state law. The transfer of water ownership from the State of California into private hands never should have happened, but in 1994, it did, behind closed doors, yet in plain view. 

A Big Water Bank is a Big Target

The Kern Water Bank is a storage facility – the largest of its kind – in the southern San Joaquin Valley. It can store more than a million acre-feet of underground water and is connected to the public canals and aqueducts that pipe water from the 75,000-square-mile California Delta watershed to urban and agricultural users south of the Delta.

In 1988, the property for the Kern Water Bank was acquired by the California Department of Water Resources (DWR) on behalf of the State Water Project (SWP) users. The bank was developed and paid for by the State of California in order to provide a more stable, reliable and sustainable source of water, especially during dry years. 

Users of SWP water are called “contractors,” and they include both urban and agriculture users – the regional water districts and agencies from whom we get our water – in Central and Southern California. Contractors are under contract with the state to pay for and receive an allocation of water, usually in addition to their own local sources.

If your water agency is under contract with the SWP, you pay to build and maintain this massive state-wide water conveyance system, including the Kern Water Bank, whether or not any SWP water is delivered. Yet because of how these contracts are written, you have no input on where the water goes or how your money is spent.

A Secret Meeting in Monterey

After years of drought, in 1994, five of the largest SWP contractors participated in a closed meeting in Monterey, California. The Department of Water Resources (DWR) was at the table with the contractors. The purpose of the meeting was to rewrite the contracts that govern water allocation for the entire State Water Project.

After days of contentious meetings, a deal with the State of California was brokered by businessmen who saw the value of owning this highly valuable public resource. The secret meeting resulted in a pact known as “The Monterey Agreement – Statement of Principles,” which in turn became codified into policy known today as “The Monterey Amendments”. 

It was in that meeting that the state gave away California citizens’ water rights and transferred it to a handful of large, privately owned corporations, which soon became the “Kern Water Bank Authority” in 1995. In the same meeting, the state also agreed to give away the underground water storage facility that DWR spent $74 million purchasing and developing.

In addition to handing over a resource meant to be held by the state “in trust” for all California citizens, the amendments to the SWP contracts included a lack of accountability regarding how much water the state was allotting to contractors. By deregulating the mechanisms of accountability, the contractors could effectively sell water that doesn’t exist, creating in essence “paper water” – water that only exists on paper (in contracts). Today, the state has already allocated 5.3 times more paper water than is available.

Stuart and Lynda Resnick own Paramount Farms and are two of the wealthiest farmers on Earth. After acquiring their 57.7% share of the water in the Kern Water Bank in 1994, they immediately doubled their acreage of thirsty, high-value specialty crops like nuts and fruit while their small-farm neighbors watched their fields and livelihoods wither due to lack of water – even in times of severe drought.

The Resnicks, as majority holders, and the Kern Water Bank Authority, can also sell stored water back to the state – water that ratepayers have already paid for – essentially getting paid twice for the same water.

What c-win is doing

The State of California grants the right to use water, not to own it. The idea of private property rights being superimposed on taxpayer-funded public water that’s managed and protected by state law is unacceptable.

This monopoly-like ownership of a public resource has been going on for more than 25 years. It’s time to rightfully return the Kern Water Bank to public ownership, oversight and control so it can benefit all Californians, not just a handful of millionaires and billionaires that profit from owning a subsidized public resource.

C-WIN Continues the Fight to Return the Kern Water Bank to the Citizens of California

C-WIN has been fighting the giveaway of this critical public resource since 1994. While we may have suffered a setback with the California Supreme Court’s refusal to hear our appeal on the transfer itself, returning the Kern Water Bank is only one part of our larger strategy to eliminate the problem of “paper water”—the allocation of water that doesn’t exist—and correcting water policy in California for the public good. On this larger issue, the law is on our side, and we will win this fight.

C-WIN would like to thank John Gibler and acknowledges his 2003 report, “Water Heist: How Corporations Are Cashing In On California’s Water,” which is on our website and used as a resource for this article.